Effective judicial protection: some reflections on Case C-49/14 (Finanmadrid)

Dear readers,

Earlier this month, Professor Chantal Mak announced that my colleague Laura Burgers and I would join her as authors of this blog. My name is Anna van Duin, and the topic of my PhD research is 'Article 47 of the EU Charter of Fundamental Rights in European Private Law Adjudication'. In the present blog post, I will discuss Article 47 of the Charter in reference to the EU Court of Justice's judgment in Case C-49/14: Finanmadrid.

Effective judicial protection: what is expected from national judges?
Article 47 of the Charter safeguards the right to effective judicial protection against the violation of rights falling within the scope of EU law. In essence, Article 47 expresses the premise ubi ius ibi remedium: rights cannot be enforced without effective remedies and adequate procedures (for further reading, see Professor Mak's 2012 paper 'Rights and Remedies'). For national judges, it is important to know what is expected from them in terms of the level of protection they should offer: does their national procedural framework meet 'European' standards? However, in practice it is difficult to assess whether national law lives up to EU law requirements, not in the last place because it is unclear which test should be applied and when: the principle of effectiveness, or (also) the principle of effective judicial protection as enshrined in Article 47 of the Charter? And what does that mean in a concrete case? 

The difficulty becomes clear in the Finanmadrid case, which concerned a preliminary reference of a Spanish court - one out of many - regarding Directive 93/13 on Unfair Contract Terms. In short, ex officio examination by a judge of the (possible) unfairness of contract terms was not mandatory under Spanish procedural law. In uncontested 'payment order proceedings' (proceso monetorio), such an examination would only take place if the court registrar (secretario judicial) deemed it appropriate, or if the debtor opposed the requested payment order. Thus, the 'burden' was primarily on the debtor, i.e. the consumer. Judicial examination could not take place at the enforcement stage either, because the payment order had become binding by then. This was clearly against the requirements developed by the CJEU in its case law on Directive 93/13, e.g. Banco Español de Crédito. According to Advocate-General Szpunar, the fact that there had been no ex officio examination of unfair contract terms at any stage of the proceedings rendered Spanish procedural law contrary to the principle of effectiveness, which entails that the exercise of EU rights must not be rendered "practically impossible or excessively difficult". Although an examination of unfair contract terms at the enforcement stage may not be desirable, the effectiveness of Directive 93/13 prevails over the binding force of the payment order. The CJEU shared the Advocate-General's conclusion. 

The Finanmadrid case demonstrates that the mere existence of a particular remedy or procedure - the consumer could have filed an opposition - is not always sufficient to provide effective judicial protection. In Finanmadrid, the contract terms at issue were presumed to be unfair, but the referring court was prevented from examining them. It could be said that, apart from the specific requirements of Directive 93/13, the right to an effective remedy before a court of law (cf. Article 47 of the Charter) is at stake here. What does Article 47 mean for national judges who find themselves confronted with a legislative gap or shortfall in the protection of rights derived from EU law, like the Spanish court in Finanmadrid? 

A missed opportunity

This is a pressing issue for national civil courts in private law cases, as is illustrated by the high number of preliminary references from Spain referring to Article 47 of the Charter (e.g., C-307/17 and C-308/15, C-503/15, C-380/15, C-7/16, C-92/16 and C-120/16). In the Finanmadrid case, the referring court had also asked whether Spanish procedural law was contrary to the Charter, in particular the right to effective judicial protection and the right to be heard. Apparently, Article 47 of the Charter and the principle of effectiveness do not entirely coincide. This raises the question why judges would refer to Article 47: is it simply ‘window-dressing’ (i.e. rhetorical), is it used as an additional supporting argument, does it operate as an ultimum remedium in lack of another adequate response, or are there other explanations? 

The relation between Article 47 on the one hand and the principle of effectiveness on the other has not been clarified yet. In previous judgments (e.g. Sánchez Morcillo), the CJEU has held that the right to an effective judicial remedy is a mandatory requirement, which is also applicable in the context of Directive 93/13. In Finanmadrid, Advocate-General Szpunar concedes that Article 47 of the Charter applies to every claim brought before a (national) court by individuals seeking protection of their EU rights. What is more, he brings forward that an "effective remedy" encompasses the rights of the defence, including the right to be heard. Indeed, an effective judicial remedy presupposes access to justice, and access to justice implies a fair trial. Rights, remedies and procedures are so closely connected that they cannot be distinguished or separated easily.

Against this background, it is unclear why neither the Advocate-General nor the CJEU addresses the link between Article 47 and the principle of effectiveness. It could, for example, be argued that Article 47 puts more emphasis on individual rights protection (cf. Articles 6 and 13 of the European Convention on Human Rights) than on the effective enforcement of EU law in general. In addition, while the principle of effectiveness entails a 'negative' test, Article 47 seems to be phrased positively: it guarantees both an effective (substantive) remedy and 'due process' (procedural) rights. Unfortunately, the CJEU's judgment does not give any clarification or guidance as regards the role and scope of Article 47 of the Charter. On the day the judgment came out (18 February 2016), I published a short blog in which I called this 'a missed opportunity'. 

Stay tuned!

Together with Professor Mak, I attended a transnational training workshop for judges, organised by the Centre for Judicial Cooperation at the European University Institute in May 2016; click here for more information about the ACTIONES project. The focus of this workshop was on consumer protection and judicial interaction techniques in the application of the Charter; one of the topics was the role of Article 47 of the Charter. Next year, we will organise a national workshop for Dutch judges about the application of the Charter in European private law matters. In February 2017, the University of Parma hosts a workshop focused on Effective Judicial Protection; a call for judges will be published on the website of the ACTIONES project. 

In my PhD research, I will further investigate how and why Article 47 of the Charter is mentioned, interpreted and applied in European private law adjudication, more particularly cases concerning Directive 93/13. What factors trigger a reference to Article 47? What role is there for Article 47 in the judicial assessment and development of (national) remedies and procedures? Relevant news and findings will be published on this blog. Therefore, stay tuned!

For any questions, comments or suggestions, please do not hesitate to contact us. 

A new Chapter

As of today, two new authors will join me in writing this blog: Anna van Duin and Laura Burgers, who are both working on PhD research within the Judges in Utopia project.

snoopy.com

Anna van Duin’s research concerns the role of Article 47 of the EU Charter of Fundamental Rights - the right to effective judicial protection - in European private law adjudication, more particularly cases the Unfair Contract Terms Directive. She focuses on the process of linking national remedies to (infringements of) EU rights against the background of Article 47: how and why is Article 47 mentioned, interpreted and applied in legal disputes between private parties before national civil courts? And what does it mean for the assessment and development of remedial and procedural rules?

Laura Burgers’ research looks into the democratic legitimacy of judicial law-making in European private law. Using a normative framework of political theory on deliberative democracy (Habermas), her research project explores the boundaries of legitimate judicial law-making in European private law, with a case-study on judicial decisions in the area of environmental liability.

Our intention is to post 1 or 2 updates per month, giving a brief analysis of relevant developments in case law, literature, and academic and societal debates on the role of national and European courts in private law.

The Dutch Supreme Court & European contract law

Dutch-speaking readers of this blog may be interested in an article I wrote on the Dutch Supreme Court (Hoge Raad)'s handling of EU law in private legal disputes (published in Ars Aequi 2015, p 716-722). In brief, the main conclusion is twofold: On the one hand, the Court integrates EU law in Dutch private law in line with a monist (constitutionalist) perspective on the relationship between European law and national law. On the other hand, the Supreme Court seems hesitant to interfere in the system of private law laid down in the Dutch Civil Code, opting for interpretation of private law provisions in line with EU law rather than amendment of the Code.

Fair time limits for unfair terms control - AG Szpunar's opinion in case C-8/14 BBVA v Fernández Gabarro

The interaction between the CJEU and Spanish national judges in procedures regarding unfair terms assessment in mortgage enforcement proceedings offers a good example of judicial contributions to the fine-tuning of rules of private law. This morning, Advocate General Szpunar delivered his Opinion in the case of BBVA SA v Fernández Gabarro and others - I reproduce part of the summary I wrote for the blog on 'Recent developments in European Consumer Law' here:

The BBVA case is a follow-up to the law reform that was set in motion by the CJEU's Aziz judgment (on which we reported earlier; see also a posts on CJEU Sánchez Morcillo and CJEU Unicaja Banco). Following this judgment, Spanish procedural was changed so as to make it possible to stay mortgage enforcement proceedings while an assessment of the fairness of the contract terms governing the client/bank relationship is pending. The present case concerns the possibilities for effective judicial policing of unfair contract terms in disputes that had been brought to court before the law reform came into force and had not yet been concluded.

The question raised by the national judge is whether the time limit of 1 month for raising a claim of unfairness of the contract terms is in line with EU law. Fernández Gabarro et al, the consumers in this case, claim that it is not in accordance with the Unfair Terms Directive to impose such a time limit. Furthermore, a limit of 1 month in their view was in any case far too short to prepare a claim, given the great number of requests made to lawyers at the time the reform law came into force, which lawyers could not handle in such a short time.

AG Szpunar observes that the question essentially regards the compliance of the Spanish provision with the principles of effectiveness and equivalence (para. 26). This implies that national rules safeguarding EU rights must not be less favourable than those governing similar domestic transactions that are not subject to Union law (equivalence), nor may they be framed in such a way as to render impossible or excessively difficult the exercise of rights conferred by Union law (effectiveness).

As regards the time limit of 1 month, the AG is of the opinion that it is in compliance with EU law: although short, it gives sufficient opportunity to raise a claim against the fairness of the contract terms governing the mortgage enforcement procedure (para. 46-47).

As concerns the date on which Art. 4 took effect, however, the AG indicates several problems. This provision, stipulating the time limit of 1 month for raising unfair terms claims in pending procedures, entered into force the day after Ley 2013/1 was published. Moreover, the consumers in the present case were not informed of this. The AG expresses doubts as to whether Art. 4, thus, complies with the principle of equivalence, but observes that it is for the national judge to investigate whether similar procedural time limits apply in comparable domestic cases (para. 53).

More importantly, in the AG's opinion, several factors justify the conclusion that the time limit renders the exercise of the consumers' rights under Directive 93/13 impossible or excessively difficult (para. 54 ff). These include the facts that procedural time limits in Spanish law hardly ever take effect the day after publication of new legislation, that consumers could only have taken full benefit of the time period set in Art. 4 if they had known about the provision coming into force, and that legal representation was required for raising a claim under Art. 4. Furthermore, on the basis of previous CJEU case law, in respect of national legislation which comes within the scope of Union law, it is for the Member States to establish those periods in the light of, inter alia, the significance for the parties concerned of the decisions to be taken, the complexities of the procedures and of the legislation to be applied, the number of persons who may be affected and any other public or private interests which must be taken into consideration (para. 61, referring to CJEU Sopropé and Pontin) - on all of these points Art. 4 raises concerns. Consequently, the AG reaches the conclusion that a transitional provision as is at stake in the present case does not comply with the Unfair Terms Directive in light of the principle of effectiveness.

Secola conference 2015

The Society of European Contract Law (Secola) announced that the theme of its annual conference will be 'EU Charter of Fundamental Rights and European Contract Law'. 

Save the dates: the conference will take place in Oxford on 26 and 27 June 2015. 

More information is available here.

Unfair terms assessment in mortgage cases in line with EU law - CJEU judgment in cases Unicaja Banco and Caixabank

Today, the Court of Justice of the EU delivered its judgment in a number of joined cases (C-482/13, C-484/13, C-485/13 and C-487/13) on the judicial assessment of general terms and conditions applying to Spanish mortgage contracts, involving the Unicaja Banco and Caixabank. 

In line with Advocate-General Wahl's opinion in the case (on which I reported earlier on the blog 'Recent Developments in European Consumer Law'), the CJEU found Spanish law to be compatible with EU law, provided that certain conditions were met.

The Court ruled:

Article 6 of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts must be interpreted as not precluding a national provision under which the national court hearing mortgage enforcement proceedings is required to adjust the amounts due under a term in a mortgage-loan contract providing for default interest at a rate more than three times greater than the statutory rate in order that the amount of that interest may not exceed that threshold, provided that the application of that national provision:

–        is without prejudice to the assessment by that national court of the unfairness of such a term and

–        does not prevent that court removing that term if it were to find the latter to be ‘unfair’, within the meaning of Article 3(1) of that directive.

See also the Court's press release.

The constitutional imagination

European private law scholarship can learn a lot from European constitutional theory. Where constitutional rights and principles determine the framework within which modern societies (have) develop(ed), private legal rights and principles also form important building blocks in the architecture of transnational societies.

Hence, a reading suggestion on 'The Constitutional Imagination', by Martin Loughlin, available in the Modern Law Review and on SSRN. Its abstract reads:

'The constitutional imagination refers to the way we have been able to conceive the relationship between thought, text and action in the constitution of modern political authority. The lecture seeks to demonstrate how modern constitutional texts come to be invested with a ‘world‐making’ capacity. The argument is advanced first by explaining how social contract thinkers have been able to set the parameters of the constitutional imagination (thought), then by showing that constitutions are agonistic documents and their interpretative method is determined by a dialectic of ideology and utopia (text), and finally by examining the degree to which constitutions have been able to colonise the political domain, thereby converting constitutional aspiration into political reality (action). It concludes by suggesting that although we seem to be entering a constitutional age, this is an ambiguous achievement and whether the power of the constitutional imagination can still be sustained remains an open question.'

An audio recording of Loughlin's lecture is available on the website of the London School of Economics.